Well, all was revealed today. Somehow, I don't feel very good about it although there were few surprises. The Fed appears to have come out ok, the Office of Thrift Supervision is no more, another new, massive government agency is to be created and we are supposed to believe that capitalism has been saved from itself. The Leader continues to give good speeches although do you get the feeling that in keeping with his Green bent a lot of the language is being recycled? There wasn't much by way of detail (as usual), but it sounded good.
For the life of me, I don't know how you go about regulating individual corporations but these clowns are about to have a go. Much better that one tries to regulate products or activities but I am afraid that is not what the real agenda is all about. Despite all the rhetoric about not wanting to run this or run that that is exactly what this administration seeks to do through its actions and the financial sector appears to be the next part of the economy not to be run by The Leader and his mob.
The thin ray of hope appears to be the positioning of the Fed to look after the systemic part of the financial sector as the Fed has up to this point been a fairly independent body rather than a newly created Clown House such as that envisioned for the consumer part of the business. Now how the hell one goes about defining what is what inasmuch as a systemic player such as J.P. Morgan Chase has one hell of a big consumer business is beyond me unless one is prepared to let the Clown House oversee the consumer bank and the Fed look after the wholesale and capital markets businesses. Now will not that be fun? But scarier yet, The Leader seemed to be saying that it will be Congress who draws up the rules of governance irrespective of the identity of the regulator. Once that camel gets its nose under the tent it's all over but the shouting...or perhaps wailing and gnashing of teeth is a better image. Further, the Fed--or perhaps Mr. Bernanke--has showed less and less interest in jealously guarding the independence of the institution than some would hope. If the tea leaves are correct, in a year's time it may well be Larry Summers in that role and while he has been spending the last few weeks trying to convince every man, woman and child that The Leader's administration does not have a socialist bent, no one really believes that an independent central bank is high on his agenda. Then again, if he becomes its chairman, who knows where his ego will lead him. Either way it's not a happy picture.
Anyway, the future is certainly an industry operating under greater regulatory oversight which, if crafted by the steady hands of Messrs. Dodd and Frank, is certain to be restrictive and useless at the same time. In the mean time the lawyers and lobbyists are going to make a fortune. Throughout all this everyone has seemed to have forgotten that the business of finance is hardly the private playground of American bankers. I used to joke that you never had to be smart to be Swiss; just have the right banking regulations and you could make a lot of money. Never will this be more true than in the future of finance where the Great American Competition is directed by politicians. We stand to lose a lot sportsfans both in the private sector and in the public arena as well, as this new page will surely have an impact on the dollar and its status in the world. But of course the systemic risk will be removed....then again, weren't Fanny and Freddie systemic? And weren't their regulators Barney and Chris? Oh well...
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